Why Ford Stock Could Gain 50% in Two Years

5/21/2013 11:18AM

Ford stock has surged more than 50% over the past year, but its sales recovery isn’t yet firing on all cylinders. Still, the stock is just getting warmed up. Barron's Jack Hough joins MoneyBeat. Photo: AP.

This transcript has been automatically generated and may not be 100% accurate.

... Ford's stock has surged more than fifteen percent over the past year ... but its sales recovery isn't firing on all cylinders still ... jackup thinks the stock is just getting warmed up and he joins us now to talk about ... so what is the bull case for Ford ... while Ford has a well-known ... recovery going on in the US is to make about a half billion dollars pretax profits in North America this year ... that's the highest in a decade however ... is to lose two billion dollars in your ... I you know and investors were with a stock up this far them in the forties peaking again but I think just the opposite is true I think some of its earnings power is being masked right now ... by this the ... lack of a turnaround yet in Europe ... forcing some good signs there in an April Europe report its first increase in ... Anoro sells about eighteen months ... not every market there is growing that you know France's all down Italy's sold out ... but Germany is the biggest market backroom nicely ... Spain is up big in the UK is innocuous ... Ford's been spending a lot to to close down some some plans reduced cost funds and pensions over their ... nostril is attracting firms' profits weighing down your prayed now but that's paid off in the future I think you could see a stabilization European sales ... you could see the removal of some of those charges it's been taking ... any this year earnings given about dollar forty this year is a Street consensus you can see those rise well over two dollars a share over the next two years so it's unsafe for specific story they wear as Ford has these advantages when it was the something where the whole auto industry's couldn't benefit ... from a recovery in your general it's really yes to both for has been gaining market share rate now at its investing's new models they've of Poplar of what we call it Micra minivan a very small minivan with good gas mileage in Europe ... ALM so you know in in the U S sales were up ... eighteen percent this leads us to students gaining share here ... all the U S car makers have been gaining share recently vs overseas rivals but ... knowing in Europe ... warning for is making these investments and didn't want to waste you can take a big one-time accounting charges in gyms can use that model ... oriented as an ongoing charge which reduces your earnings and four has been doing that ... it's a pressing earnings right now but as those charges one down your Tennessee more earnings power going forward ... I will be here to see rare for a recovery in Europe later you've seen in the U S ... but all you need is a stabilization there ... the removal of the losses in Europe that have been obscuring some of the earnings power from the US ... you can see earnings moves well higher ... Ford also doubled its dividend payment and Jamie work the statement didn't and still looks low relative to earnings you can smack stemming from Eureka to two point seven percent year to grow quickly ... it what can investors look at ... up from four to see whether night her thesis is playing out regarding your urine while sales in Europe are the big key right now ... the US is Ari humming along nicely what you need is enough for you better get a two billion dollar loss this year one analyst thinks that that's can fall by more than half next year ... eventually over the next few years wind outward half for him nope no losses in Europe ... you have more earnings power over all but I keep an eye on industrywide sales trends and you're ... good to now thanks for joining us thank you ... to read more from